Sprouts Farmers Market 2013 Annual Report Download - page 73

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Table of Contents
Management has assumed weighted average useful lives of 37.4 years, 8.0 years and 5.0 years for buildings, leasehold
improvements and furniture, fixtures and equipment, respectively, in arriving at the pro forma depreciation adjustments.
(c)
Reflects costs associated with the Transactions, which have been excluded from pro forma results due to the absence of a
continuing effect on our business. These costs consist of (i) $5.9 million of transaction expenses we incurred in 2011 in connection
with the Henry
’s Transaction, consisting primarily of professional fees, (ii) a $24.6 million termination fee and $1.4 million of fees
paid by Sprouts Arizona to its previous manager prior to the Henry’s Transaction and recorded in Sprouts Arizona’s pre-
combination financial statements, (iii) $6.9 million of transaction costs, consisting primarily of professional fees, recorded in Sprouts
Arizona’s pre-combination financial statements, and (iv) $3.3 million of payments and equity-based compensation expense
associated with a change in control recorded in Sprouts Arizona’s historical pre-combination financial statements. The pro forma
adjustment also includes (i) a decrease of $0.6 million to historical depreciation related to the fair value of acquired furniture and
fixtures used for general and administrative purposes, which are being depreciated over their estimated useful lives on a straight-
line basis, and (ii) an increase of $0.2 million to historical amortization expense associated with the Sunflower trade name.
Management has assumed weighted average useful lives of 3.9 years for the acquired furniture and fixtures and ten years for the
Sunflower trade name in arriving at the pro forma depreciation and amortization amount.
(d)
In April 2011, we borrowed $310.0 million, net of $2.7 million in financing fees and $14.0 million of issue discount under the
Former Term Loan to finance the Henry’
s Transaction. In May 2012, we borrowed an additional $100.0 million, net of $0.5 million in
financing fees and $2.7 million of issue discount under the Former Term Loan, and received net proceeds of $35.0 million from the
issuance of the Notes to finance the Sunflower Transaction. The pro forma adjustment represents (i) the incremental interest
expense of $15.9 million from our Former Term Loan and the Notes, including amortization of issue discount and deferred financing
fees of $1.2 million, based on an interest rate of 6.0% in effect for our Former Term Loan, (ii) the reversal of historical Sprouts
Arizona and Sunflower interest expense of $3.4 million, as the pre-combination Sprouts Arizona and Sunflower debt was paid off in
connection with the Transactions, and (iii) a decrease in interest expense of $0.7 million resulting from the new basis in the Sprouts
Arizona and Sunflower finance and capital lease obligations acquired in the Transactions. A one-eighth percentage increase
(decrease) in the interest rate on our Former Term Loan would increase (decrease) interest expense by $0.5 million for fiscal 2011.
(e)
The pro forma adjustment to income tax (provision) benefit is derived by applying a blended federal and state statutory tax
rate of 39.3% to the above pro forma adjustments.
Quarterly Financial Data
The following table sets forth certain of our unaudited consolidated statements of operations data for each of the fiscal
quarters in the fiscal years 2013 and 2012.
68
Thirteen weeks ended
April 1,
2012(1)
July 1,
2012(2)
September 30,
2012(3)
December 30,
2012(4)
March 31,
2013(5)
June 30,
2013(6)
September 29,
2013(7)
December 29,
2013(8)
Net sales
$
375,720
$
430,112
$
510,050
$
478,941
$
573,694
$
622,367
$
633,614
$
608,236
Gross profit
$
116,787
$
130,731
$
146,409
$
136,382
$
173,920
$
187,027
$
190,105
$
174,215
Income from operations
$
24,233
$
17,652
$
13,295
$
15,505
$
40,046
$
40,078
$
36,681
$
22,699
Net income
$
9,546
$
5,306
$
1,307
$
3,341
$
18,117
$
12,468
$
11,461
$
9,280
Net income per share:
Basic
$
0.09
$
0.05
$
0.01
$
0.03
$
0.14
$
0.10
$
0.08
$
0.06
Diluted
$
0.09
$
0.05
$
0.01
$
0.03
$
0.14
$
0.10
$
0.08
$
0.06